When Queen Elizabeth died, her throne was inherited by her son King Charles III, while his son Prince William inherited the title of ''The Prince of Wales'' from his father, King Charles III. As everyone in the family line inherits the position of their lineal ascendant every time the King or the Queen dies, do they really pay inheritance tax on it?
First, what are the inheritance laws? Everyone who inherits above a £325,000 threshold in Britain has to pay an inheritance tax of 40%. Except for the King. The new King will not pay any taxes on this large inheritance of personal wealth that he inherits from his mother because of some rules drawn up in 1993. The 19-year-old rules say that when assets are passed from one sovereign, or a consort of a sovereign, to the next monarch, they are exempt from taxes.
Why? This is done to preserve the royal wealth in case a series of monarchs die in quick succession. Imagine if that happens: the royal wealth will deplete down very quickly - 40% at a time.
Now, how much wealth did King Charles exactly inherit? Queen Elizabeth II had amassed an estimated $500 million in personal assets which King Charles inherited after his coronation as King. He directly inherits the Queen's private assets like the art collection, jewelry, and real estate holdings (The Sandringham and Balmoral castles).
King Charles also inherits some other things symbolically or indirectly which are controlled by ''The Crown'', which is the trust institution that will now be headed by King Charles III. Though the King will manage these assets, he cannot possess these directly or sell these. This includes the Crown estate lands (ie. Buckingham Palace and Windsor Castle), the Royal Archives, the Crown Jewels (yes, the Kohinoor) and the Royal Art Collection (separate from the Queen's personal art collection).
King Charles III and Queen Camilla take their places on their thrones in Westminster Hall. pic.twitter.com/wPzCps4fnU— Elizabeth II News & Updates (@Platinum2022) September 12, 2022
Did he also not own the centuries-old Dutchy? England has two dutchies: The Dutchy of Cornwall and The Dutchy of Lancaster, which are private real estates that have historically been passed on for centuries in the Royal Family. Before King Charles was coronated as the King, Queen Elizabeth would handle and receive income from the Dutchy of Lancaster while King Charles would earn an income from the Dutchy of Cornwall. After King Charles was coronated, The Dutchy of Lancaster was passed on to King Charles and the Dutchy of Cornwall was passed on to Prince William.
Will he skip it all? Yep. The new king will avoid inheritance tax on the estate worth more than $750 million. The Lancaster estate generated revenue of £24 million ($27 million) last year and has assets of about $442 million as of 2011. As King Charles is now entitled to its income, he will skip the inheritance tax on The Dutchy of Lancaster and even the personal and other assets that he inherits. Lucky man!